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Saturday, May 19, 2012

What Will You Pay To Play?

Last week, Kill Screen published “Will Work For Fun,”
in which Mike Thomsen argues that the free-to-play model has changed
the way we assign value to games. I don’t think anyone can dispute that.
But Mike’s essay also contains a number of other assertions I’m not
sure hold water, particularly around the nature of play. For the
purposes of this post, though, I’m going to focus on his assumptions
about value.On DepreciationIn discussing how the value of games changes, Mike presents the following example:You
might have waited in line at a midnight launch to get Madden NFL 06 a
few years ago and today find it in a bargain bin for $1. The game is
unchanged, and its inherent value as an experience is identical to what
it was then. What has changed is the perception of its value, driven by
corporations whose business model relied on there constantly being a new
game every year, one which necessarily obviated last year's model. We
were not simply buying games in the days of brontosaurus-sized
publishers like EA, we were paying for the privilege of participating in
a zeitgeist that was largely created by corporate branding.I
think there’s a misrepresentation of the concept of depreciation here. I
do some (very basic) accounting in my day job, so I’ll do my best to
explain as I understand it.The
classic example of depreciation is a car. It’s often said that a new
car loses a big chunk of its value as soon as it’s driven off the lot.
The “inherent value” of the car is unchanged, but since when it leaves
the lot it becomes a “used car,” its market value immediately decreases.
So Mike has a salient point that market value is strongly tied to
people’s perception of value. Ask a collector: an item is worth only as
much as what someone is willing to pay for it.It’s
easy to understand depreciation with the example of a car. (For the
moment, let’s assume value judgments about the car’s style or brand are
irrelevant.) Over time, the car wears down due to normal usage. It’s
naturally not worth as much as a new car when it’s got several thousand
miles on it, because its functionality has decreased. The car’s
decreased value is attributable to its decreased utility. To be sure,
people’s perception of the car’s decreased utility also contributes to
its decreased value, but there is also physical, tangible evidence of
its degradation.

It’s
trickier to apply that reasoning to videogames, where physical
degradation is not the contributing factor. As Mike points out, the copy
of Madden NFL 06
in the bargain bin is not $1 because the disc is scratched, but because
the market’s perception of its value has decreased. But he also makes a
few assertions here that I think are flawed.First, Mike claims that the “inherent value” the game “is unchanged.” Is NFL 06 the
same game in 2012 as it was six years ago? To some extent, yes. But it
is also fundamentally different in ways that compromise its utility. The
multiplayer servers, for example, are almost certainly shut down by
this point, removing a major feature. Even if the servers weren’t shut
down, very few people would be playing this game; its value is partly
dependent on how many people are playing it, not necessarily in the
sense of the “zeitgeist” Mike mentions, but in practical terms of
finding opponents. The game’s value would have also plummeted had a new
Xbox been released; technological advances are a driving force in
depreciation. Similarly, as new standards for game design and
performance become more prevalent, games designed with older paradigms
become less attractive. In other words, the game disc itself is not the
entire product; it’s also the support services associated with it, along
with its player base. Games do lose value over time, just not because
of physical use.Second,
Mike attributes the decreased value of the game to the publisher’s
business model, which pushes out a new version every year. I think Mike
might be implying that the changes to gameplay between Madden games
of one year and the next are too incremental to justify their cost. If
so, I’d tend to agree. But he’s ignoring here that one of the key
drivers for producing a new NFL game (or any sports game) every year is
that the sport itself has changed. In the case of football, changing
rosters (particularly in the age of free agency) can completely alter
the landscape of the league, and thus the sport. My own Buffalo Bills,
for example, are suddenly a contender with the few big player
acquisitions they’ve made this offseason. The Madden
games are designed and billed as simulations (or at least reflections)
of the sport; if the sport changes, the videogames must change, or they
lose their value very quickly. The experience is certainly not
“identical” to what it was years ago.Finally,
in his last two sentences above, Mike seems to be implying that EA
intentionally contributes to the depreciation of its own games by
releasing a new one every year. It’s possible that’s the case, since it
certainly can’t be argued EA is not prioritizing new game sales. (So is every publisher,
in case you haven’t noticed.) But I suspect that if this is true, it’s
infrequent. No company, even EA, wants to be perceived as a purveyor of
easily disposable products that lose their value quickly. Think of how
many car commercials emphasize the car’s durability. Sure, a videogame
is not a car, but if the game doesn’t retain a significant portion of
its value over time, the publisher loses out on profits. Hence the
popularity of trends designed to ensure games retain value over time,
like DLC.Some
games depreciate in value simply because they suck. Once word gets out
that a game is awful, its price often suffers a sharp decline. You could
find a copy of Rogue Warrior
in the bargain bin a scant month after release because it was a
terrible game that received negative reviews. Retailers couldn’t get
away with charging $60 because nobody would pay that much for such a
lousy product. Yet great games that have been out for months, and even
years, today retain a significant portion of their value because
consumers agree they do. This is the case for both heavily-marketed AAA
releases and smaller cult favorites. Branding absolutely plays a big
part in market value. But I think Mike assumes consumers, and thus
prices, are more susceptible to marketing than they are. If they were, Homefront and Red Faction: Armageddon would still be selling for $34.95 instead of $14.95.

What Will You Pay To Play?I’m
wary of conflating “price” with “value,” since as as the rise of
fantastic free and cheap games has made abundantly clear, the two
concepts are not identical. I’m equally wary of coming off like some
kind of free-market nut by emphasizing the market’s role in determining
value. But I do find Mike’s claim that corporate business practices,
including marketing, are the key drivers of value hard to swallow. I
do think there’s a related point to be made, though, about pricing. I’m
not alone in thinking that the default $60 price point for new releases
smacks uncomfortably of record companies’ collusion to fix CD prices in
the 1990s. I’ve long thought that more flexibility in pricing could
help alleviate the industry’s woes, including piracy and the dreaded
“used game problem.” (For an interesting discussion on “middle ground”
pricing, check out this episode of the GWJ Conference Call.)The
free-to-play model is undeniably burgeoning, but it’s still
experiencing growing pains. Mike’s point that free-to-play games lay
bare the explicitly capitalist underpinnings of videogames is
well-taken. I have a few games on my iPad that contain no less than
three different types of in-game currency, all of which can be bypassed
by spending real-world currency. There is something indelibly icky about
this kind of design, the kind that makes every interaction feel like a
transaction. It’s also often implemented in clumsy, inelegant ways that
distract from the play experience.But
free-to-play is not going away anytime soon. I do believe it has to
innovate or else suffer a slow, painful death. Eventually a critical
mass of consumers will tire of its crasser tactics, or some new
technology will render these types of games obsolete, and the model will
prove unsustainable. Advertising revenue will undoubtedly keep it
afloat for longer than it would otherwise be; one of the reasons console
games can’t as easily exploit the free-to-play model is that it’s much
less complex to push ads to mobile platforms. For now, we’ll have to get
used to it.